How Fairtrade is maintaining its relevance

By Katy Askew contact

- Last updated on GMT

©marekuliasz/iStock
©marekuliasz/iStock
Sales of Fairtrade products continue to grow in Europe. But certain companies and retailers are abandoning the mark in favour of internal programmes. Is certification still relevant?

Sales of products that have been certified Fairtrade continue to rise in western Europe, growing ahead of the overall grocery category. In 2016, Fairtrade sales increased by 2% in the UK to £1.65bn (€1.38bn), according to figures from the Fairtrade Foundation. In Germany, sales increased by 13% in the same year rising to €1.2bn the country’s Fairtrade body TransFair revealed. In Italy, sales were up 11% to €110.2m, Fairtrade Italia revealed.

However, Fairtrade certification organisations are facing a growing number of challenges in an evolving environment.

Bringing Fairtrade in-house

Fairtrade facts and figures

  • More than 1.65m farmers and workers are in Fairtrade certified producer organisations
  • There are 1,226 Fairtrade certified producer organisations in 74 countries worldwide
  • €106.2m was paid out in Fairtrade premiums between 2013-2014
  • On plantations, workers spent 26% of their premium on education
  • Small producer organisations spent 31% of their premium on productivity improvements

Source: Fairtrade Foundation

Mondelez International announced last year that its Cadbury Dairy Milk chocolate brand will no longer carry the Fairtrade mark.

Cadbury moved its chocolate to Fairtrade-certified back in 2009, when it still operated as an independent chocolate company prior to its acquisition by Mondelez.

Mondelez is transitioning Cadbury products to its own sustainability programme, Cocoa Life, a process that it expects to complete by 2019. Announcing the move, Mondelez stressed that it will continue to work in partnership with the Fairtrade Foundation to ensure labour justice in its supply chain.

UK retailers have also signalled a move towards their own certification schemes. Both Sainsbury’s and Tesco are rolling out products such as tea, bananas and coffee that claim to be “fairly traded”​.

Announcing the move, Sainsbury’s – the world’s leading Fairtrade retailer – said that the pilot scheme does not move it away from Fairtrade principles. “This is about long-term planning and working without farmers to help them become stronger and more resilient,”​ Judith Batchelar, director Sainsbury’s brand, said.

Advocates of the Fairtrade movement are concerned that this represents a threat to standards.

“The Fairtrade mark is challenged at the moment. It is hugely successful... It has a very high awareness, about 90% recognition among consumers. But behind that we have seen a lot of businesses losing confidence in Fairtrade and moving away from the mark. Mondelez, Mars to some extent, Sainsbury’s,”​ Jamie Hartzell of Divine Chocolate – a part-farmer owned business synonymous with trade justice – observed.

Hartzell believes that multinationals have taken the learnings from being part of the Fairtrade scheme and now want to deliver similar outcomes within their own chains at a lower cost.

For retailers, he suggested the situation is “more complicated”​ due to the array of different certification schemes on the market. “They are facing this multiplicity of independent standards and marks, all of which have areas of overlap as well as different criteria. They all require different standards of management and have different costs to them. It makes a hugely archaic and complex system to run. You can understand why they might think ‘lets bring the system in-house, do it ourselves and have a much more joined-up system’.”

Too many ethical labels?

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According to Julian Warowioff, founder of ethical drinks supplier Lemonaid Beverages, the wide array of different certifications and seals out there can be “challenging”​ to manufacturers and confusing to consumers.

“What we find challenging at the moment is there are a lot of new labels popping up… Few consumers can really differentiate between the different labels. For a lot of chains, having one label – no matter what the standards are – in place seems to be enough. I feel that really dilutes the whole idea of ethical or sustainable certification. If there is a mist, this blurry situation that we are in where there is no clear differentiation anymore.”

However, Warowioff stressed during a sustainability roundtable at start-up event Bread & Jam, Lemonaid believes that Fairtrade certification has an important role to play.

“There is so much messaging around our products, there is no way we could communicate that. Breaking it down to one or two seals or labels that are recognised by consumers helps tremendously. It gives us the independently verified trust of the consumer,”​ he explained. “You can get [credibility] by partnering up with what I believe is the highest quality independently certified ethical label on the market, which is Fairtrade.”

Moving with the times

blockchain; IT, IoT, trace JIRAROJ PRADITCHAROENKUL
©JIRAROJ PRADITCHAROENKUL/iStock

Divine’s Hartzell believes that for Fairtrade to remain the ‘gold standard’ of labour justice, it is important for the certification body to evolve its approach. In particular, Hartzell suggested Fairtrade certification needs to reflect the growing importance of provenance to consumers and the new technologies that are bringing information to the fore.

“The landscape is changing. The provenance of a product has become one of its core characteristics and one of the desirable things for a consumer. You want to know where it came from and you want to be able to trace the route of that product from the farm right the way through to your fork. If you understand that process, you feel more confident in that product. And you want to know that nothing nasty has happened on the way – that it hasn’t caused harm to… anyone in the chain. That traceability element is becoming more and more important.

“I think Fairtrade probably hasn’t kept up with developments in technology, the internet, Blockchain and things. There needs to be a much closer look at how traceability and certification interact… We need to look at the new generation of Fairtrade if it is going to have the same success in the next 20 years.”

The Fairtrade Foundation stressed that it is updating its strategy, via its “ambitious”​ new strategy for 2016-2020. Under this strategy, the Foundation has identified four key goals: focus on impact, make Fairtrade personal, improve and innovate, and to strengthen its organisation.

“Fairtrade is more relevant than ever for business as it can help build more sustainable supply chains, stronger producer ​partners and stronger customer loyalty,”​ a spokesperson for the organisation insisted.

“As the world’s most trusted certification label Fairtrade is seen by consumers as the easiest way to choose an ethical product, but more than that, it is a way that businesses can address greater and more diverse sustainability challenges within their supply chains, from climate change, gender empowerment and productivity to organisational development, transparency and modern slavery.”

Through “continuous innovation”​ the Foundation is altering how it works with companies to promote Fairtrade values. “Where an organisation such as Mondelez wants to be more responsible for their supply chains we can ensure that Fairtrade values are at the heart of the programme and that we play a key role in helping ensure their commitments are delivered,”​ the spokesperson insisted.

Related topics: Market Trends

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